Gulf Consulting House (GCH)Gulf Consulting House GCH is a consultancy office based in ( Eastern...
Transcript of Gulf Consulting House (GCH)Gulf Consulting House GCH is a consultancy office based in ( Eastern...
Gulf Consulting House (GCH)
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GCH
We would like to welcome you first and thank you for
attending this discussion.
Today we will focus on the new rules and instructions
issued by SAGIA concerning the foreign companies
in contracting & construction sectors.
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Gulf Consulting House
GCH is a consultancy office based in ( Eastern
province - AlKhobar) and Riyadh, Kingdom of Saudi
Arabia and Manama In Kingdom of Bahrain.
Our major service is to register foreign companies
and provide after registration consultancy services.
GCH registered more than 1000 Company. GCH is
also a consultancy office dealing with more than 30
embassies in the Kingdom of Saudi Arabia. You are
always welcomed to visit our website to get more
information about GCH services and latest news
and events by visiting www.gch-saudi.com
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SAGIA’s New Investment Policy
SAGIA is now applying a very strict and conservative policy
regarding issuing new licenses as well as renewing existing
licenses. This is in fact a reaction to the relatively easy
process which SAGIA applied few years ago and which led
foreign companies to enter the Saudi market. Some of
those investing companies (as per SAGIA) had negative
effect on Saudi Economy.
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SAGIA’s New Investment Policy
SAGIA is now welcoming big players into the market. They
are being very selective now. An example of those
companies working under the sectors of contracting, IT and
communication.
Even for other sectors , the registration requirements has
been changed depending on the targeted activities in KSA.
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SAGIA’s New Investment Policy
SAGIA Committee has the right to decide whether to
accept or reject issuance of new licenses and/or renewing
existing licenses files if it deems no “Added value" for the
Saudi Market.
For Example, SAGIA Committee in Riyadh is the only
entitled entity to license a new company and not like before
when it was allowed for SAGIA – Damamm to approve
License. Such new procedure affected even the duration of
licensing new companies.
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1. SAGIA issued new rules and conditions for those
already registered foreign construction and contracting
companies in KSA. Any registered foreign contracting
company must with a period of 12 months from the date
of renewing its license to comply and apply the new
conditions adopted by SAGIA.
2. SAGIA even contacted and sent for all current investors
by e-mail, fax or SMS notifying them about those new
compliance rules.
How new SAGIA Policy will be applied on registered investors in
KSA
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The followings are the new conditions adopted by
SAGIA to be applied on your companies since your
companies’ activity in KSA falls under the construction &
contracting.
SAGIA will be requesting from you to sign an
undertaking to apply and comply with the followings
within a period of no more than (12) twelve months
from the date of submitting to SAGIA the obligatory
undertaking letter:
What are those new Rules applied on current Contracting and Construction Companies ?
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Commitments & Undertakings
1- To separate between operating and maintenance activity
and the activity of construction and building so as not to
combine the two activities into one license if the number
of employees is less than 300 employees.
Such separation will off course require from investing
companies to submit new documentations to revise their
License, AOA and CR.
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Commitments & Undertakings
2- To replace the phrase (execution of contracts) with the
phrase (construction and building - for activities in the field
of construction and building) or by the phrase
(management of maintenance, operation and cleaning -
for activities in management services, maintenance and
operation and cleaning).
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Commitments & Undertakings
3- The adoption of the areas of classification issued by the
Ministry of Municipal and Rural Affairs (MOMRA) as a
reference for the identification and description of the
activities related to the construction activity, building,
management and maintenance actively operating and
cleaning issued by SAGIA
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Commitments & Undertakings
4- Obtaining an insurance against company’s errors in
execution of the project.
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Commitments & Undertakings
5- Provides an unconditional and irrevocable bank
guarantee in the name of SAGIA by 2% of the financial
limits for 3rd Class of the classifications for the targeted
activity. Such guarantee remains valid and enforceable
until the write-off the commercial registration. In Addition
to the above mentioned, a bank guarantee of 2% of the
average value of the projects executed annually (which is
higher). 13
Financial limits set out below are in accordance with the decision of the Council of Ministers No. 155
date 5/6/1429.
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Explanation for Classes/ Fields Buildings
Concrete buildings
Precast buildings
Steel Buildings (steel)
Roads
Earthworks for the construction of roads,
including (backfill , leveling & compaction)
Pavers
Runways
Bridges
Tunnels
Railways
Water Works & Sewage
Water purification plants & sewage
Water & sanitation
Storm water drainage networks
Water reservoirs
Irrigation & drainage projects
Water pumping stations & sewage
Electrical Work
Power plants
Energy conversion plants
Power Transmission & Distribution
Street Management
Traffic lights
Solar power plants
Cathodic protection
The uninterruptible power units
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Explanation for Classes/ Fields E-Business
Transmission system & visual voicemail
Equipment of audiovisual studios
Production control functioning system
Monitoring , safety & security System
Medical / laboratory electronic equipment
Supply & installation of devices & computer
equipment (computers, networks & extensions).
Telecommunication Technology
Telephone local & long-distance.
Mobile telecommunication services.
Enhanced communications services.
Communications services using fiber.
Telecommunications services using a dial-up
circuits & custom lines
Core network capabilities.
Client Access Services.
Development of systems, applications &
databases.
Internet services.
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Explanation for Classes/ Fields Mechanical Works Cooling System Central A/C system Water pumping stations & sewage Water purification plants, sewage treatment plants Ventilation system Elevator / escalator Silos Pneumatic transport networks Container berths Bulk shipments handling networks Conveyor system Mechanical heating system Turbine / steam boilers Power plants Fire control systems
Industrial Works
Factories
Desalination plants
Networks, oil & gas pipelines
Flour Mills
Waste incinerators
Silos
Shipbuilding & Repair Shipyard
Gas containers
Mines & mining industries
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Explanation for Classes/ Fields planting gardens & organize sites
(landscaping )
streets planting
Gardens
Public parks
Organizing sites
Irrigation systems for gardens
Slaughterhouses
Automatic Slaughterhouses
Regular Slaughterhouses
Marine Works
Repair Ship yards
Jetties
Drilling and fixing of pillars
Deepening & cleaning
Underwater tunnels
Underwater extensions
Barriers / bridges / roads Navy,
Anchors
Dams
Concrete dams
Earthen dams
Drilling wells
Tubular Wells
Manual wells
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Commitments & Undertakings
6- Provide organization structure of entity and Saudization
plan provided that the foreigners percentage of managers,
executives, specialists and technicians not to exceed 25%
of the total of admin, executives, specialist jobs for entities
with manpower less than 300 employee.
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Commitments & Undertakings
7- Provide an annual report on all projects that awarded to
or executed by the company and the value of each
project. Such project size should commensurate with
entity size and its manpower, execution by subcontracting
should not exceed 20% of each contract value.
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Commitments & Undertakings
8- Provide all data, information and the financial statements
to any auditor assigned by SAGIA to audit its financials.
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Example for Current Licenses
OBJECTIVES:
Performance of contracting works related to
construction, operating and maintenance, repair,
commissioning of: Power Plants and all related works
under the Saudi Arabian General Investment Authority
License No ………………..Dated ………….(H)
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Changes to be adopted
To rewrite the objectives of the company by
omitting “Performance of contracting works”. And
to rephrase it in away accepted by SAGIA.
To separate between Construction and
Maintenance activities. For companies less than 300 employees in KSA.
To provide a bank guarantee for an amount of
SAR 2.8 Million.
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How Serious is this issue ?
SAGIA is taking this subject very serious and will apply a
real strict penalties on those companies fail to meet the
new standards (SAGIA stipulated more than 34 violation
acts).
Penalties adopted by SAGIA may result in applying huge
fines and even cancelling the investment license.
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How Serious is this issue ?
SAGIA Board of Directors Issued on 14/11/1433 (H)
corresponding to 30/09/2012 (G) a new list of acts
considered Violations to SAGIA Regulation, the complete
list of violations can be found in our web site:
www.gch-saudi.com.
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What will be the case if you did not comply with SAGIA’s new requirements
Unfortunately, it is not an option to negotiate with SAGIA at
this stage about the wording of the undertaking letter. It is
a must to submit this letter as is and you will get 12 months
provisional period after that to “correct” your company
situation to meet new SAGIA requirements. Any company
violates the investment regulation shall be subject for one
or more of penalties to be decided by SAGIA committee.
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What to do ?
GCH is ringing the bill for a serious issue which you need
to handle and take care about. GCH offers hereby for you
to assist and guide your esteemed companies to apply and
comply with new SAGIA’s instructions and criteria on
Construction Companies
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What is the Mechanism adopted by SAGIA ?
SAGIA’s Licensing Follow up Department major role is to
check and categories investors into 2 main categories;
Complied with SAGIA Not complied
with SAGIA
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What is the Mechanism adopted by SAGIA ?
The most important thing is to be Complied with SAGIA
where all services will be provided to the company and this
depend on the discussions with Follow Up Department and
reliable explanation to SAGIA if you cannot comply with
some of those undertakings and find proper solutions.
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GCH Advice
Take Care !!
Always focus on how your company can comply with those new requirements and keep in mind that not all conditions apply on all companies.
You need to avoid falling in any of restricted acts which may complicate your file in SAGIA.
always shoot for keeping your company updated with all new and most recent regulations and instructions issued by SAGIA and other government departments.
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Thank you
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Phone: +966 (13) 8820570 / +966 (13) 8873041
Fax: +966 (13) 8822147
E-mail: [email protected]